ECON 4 Study Guide - Midterm Guide: South Texas High School For Health Professions, Real Wages, Nominal Interest Rate
Document Summary
Types of accounting: financial -for outside the business, tax for taxes/ the gov, managerial for outside the company. Two main standards: gaap: compliance is required in the usa. Accrual vs. cash basis record when revenues and expenses are earned. Recognition criteria: earnings principle: goods and services have been provided or rendered. Delivery is complete. (revenue: the realization principle: payment has been received in cash or cash equivalent. Collection probability. (revenue: the matching principle: expenses are recognized in the same period as the revenues are related to. The balance sheet equation: assets = liabilities + equity: assets resources, equity the residual claim on assets; selling a piece of ownership. Operating activities: related to providing goods and services to customers. Receipts of dividends and interest earned from investments. *note that dividends and interest received are considered operating cash flows (not investing cash flows) Operating cash outflows exclude depreciation, amortization, non-cash items, gains or losses on disposal of pp&e.
